The new firm, which is expected to include around 10 of Linklaters’ 30 Shanghai-based lawyers by the end of the year, will handle local law including M&A, competition, derivatives and structured products, financial regulation and disputes. The move was voted through by Linklaters’ partnership during the firm’s global partners meeting in Berlin this month.

Shanghai Free Trade Zone rules state a firm must be independent for at least three years before entering into a formal tie-up with an international partner. The spin-off plans conclude ‘Project Trident’, headed by Asia managing partner Marc Harvey, to secure PRC law capability for the leading London law firm. The project saw Harvey oversee discussions with around 10 Chinese law firms.

The free trade zone regime comes as part of a move to liberalise the protectionist legal services market in China. US-based law firm Baker & McKenzie became the first international firm to practise PRC law when it entered a joint operation with FenXun in the Shanghai Free Trade Zone in April 2015.

Linklaters said in a statement: ‘In the coming months some of our former colleagues will seek to establish a separate PRC law firm…with which the firm will enter into a best friends relationship and then, when permitted to do so, enter into alliance or cooperation arrangements constituting joint operations under the rules of the Shanghai Free Trade Zone.

‘We expect to see stable and sustainable growth in China over the long term. Market shifts have indicated that outbound work and high-end domestic transactions will become ever more important for our business. We believe that being able to offer integrated Chinese and international law advice will help us to protect our competitive advantage both in China and globally.’